Eyeing the Charts

 | Oct 11, 2011 | 10:59 AM EDT  | Comments
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Stock quotes in this article:

aapl

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pcln

,

amzn

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fxcm

,

wwww

,

goog. gmcr

Market action is very slow once again, but some buying interest is keeping the bears at bay.

Apple (AAPL) is boosting the indices on a $700 price target from Hudson Square Research, a small firm that is probably looking for some attention. The strength in Apple is creating sympathy action in other big-cap-momentum names Priceline (PCLN), Google (GOOG), Green Mountain Coffee (GMCR) and Amazon (AMZN).

Breadth is negative as small-caps underperform. Oil is leading while banks and precious metals lag.

As I explained in my opening post, the psychology of this market lately is to try to catch market players leaning the wrong way. At this point, one can't help but think we are due for some sort of pullback after running straight up for a week, but the very fact that so many are leaning toward profit taking and/or shorts is creating an inclination to keep pushing to the upside to squeeze the shorts and create some chasing.

It is a very similar to a Ponzi scheme, but it will keep running as long as there are new buyers who are willing to play. Eventually, the buyers drop out and the market will fall quickly, but you just don't know how high we can go before the reverse sets in.

The biggest challenge is that there continues to be very few chart setups of interest. The combination of low volume and a big bounce isn't conducive to the sort of setups I favor.

One chart I'm looking at is FXCM Inc. (FXCM), which is a broker specializing in foreign-exchange. It has excellent earnings and the stock has been threatening to break through the $14 level for a few weeks. It is extremely thin, which is dangerous in this market, but it has the sort of chart I like to see.

Another one on my radar is Web.com Group (WWWW), which I've mentioned a number of times previously. This is not an ideal chart by any means but it is trying to turn up now, and if it can regain its 50-day simple moving average at $8.60, I'll be much more interested in building my position.

Columnist Conversations

Kass:
On the weaker than expected #s. From $143 to $106.
Kass:
Mark Cuban is probably buying Amazon too! Kidding.
Take the money and run! I greatly appreciate Howard's input and find it both accurate and useful for everyone....
I used the big drop following Boulder Brands (BDBD) earnings report to close out my 'Best Ideas' short of BDBD...

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